A reader and their husband intend to sell up at the end of the mortgage term and leave London.
Photograph: Alamy

Q My husband and I want to extend the term of our mortgage from the current five years from now up to 10 years. This is to enable us to stay put in London until our daughter has completed her education. However, this means we will both be in our early 60s and we already earn less now than when the mortgage was originally agreed. We owe £210,000 on a flexible mortgage and currently pay interest only. We have a large potential equity in the home and intend to sell at the end of the mortgage term and move out of London. My husband is also one of two named beneficiaries for his mother’s London home. At its current value this would clear the outstanding loan we owe. Given the equity in our own home and the inheritance but with a reduced income, how likely would it be that we could extend our mortgage term and would be able to continue to pay interest only? SM

A It’s not totally clear whether your husband’s inheritance from his mother’s house is actual or potential. If it is actual – and so the house could be sold to raise cash – you could pay off your mortgage entirely instead of extending it.

However, if the money from the inheritance is potential because your husband’s mother is still alive – and so the money is not actually available for spending – it has no effect whatsoever on your ability to extend your mortgage term by five years.

What may make it very likely that your lender will agree to a five-year extension is guidance from the Financial Conduct Authority (FCA), which says that it expects lenders to deal fairly with interest-only mortgage customers – such as yourselves – who risk being unable to pay their outstanding loan at maturity (without selling up).

What this means in practice is that lenders must provide customers with options to improve their situation. These include: switching the mortgage to a full, or part, capital repayment basis; extending the mortgage term, as well as switching to a full, or part, capital repayment basis; extending the mortgage term to provide more time to repay the capital outstanding or to sell the property; accepting overpayments; combining any of the above with part repayment of the mortgage; and extending the mortgage term on an interest-only basis.

Assuming that your lender thinks you will be able to afford paying interest for another five years – as extending the term on an interest-only mortgage does not change the monthly amount you have to pay as it does with a repayment mortgage – it’s likely that your lender will agree to the term extension.